One good way to look at the flow in your accounting department regarding the month end financials is to have a journal entry log that you can take a look at.  This log will list out the various journal entries that need to be produced, by whom and what period of time. 

The journal entry log can help you map how long it takes to produce the month end financials.  You can use it as a guide to see if there are not enough taking place during some days or too much being counted on on other days and are not realistic. 

 It can also be an accountability document used to hold people accountable for getting journal entries done and financial statements completed by a certain number of days after month end.  It sets a timeline for the people in accounting and gives people a goal to shoot for the close of the financial statements.

Hopefully too though, it won’t just be a list that just gets plugged in and put in the shelf.  I think some of the greatest power from having a journal entry log is being able to look at it and determine ways that the process could be accelerated. 

Among the ways that might work:

1.  Number of journal entries.  If there is an awful lot of journal entries that need to be produced, it could be a signal that you are better off streamlining some of these.  Are there certain journal entries that are not needed or, perhaps, could be moved to a quarterly basis or could be handled as memorized transactions, but not as a specific journal entry?

2.  You can look at the sequencing and see if there is any particular gap in time.  For example, you can see if there is several days between when journal entries are produced and when they get up to the client.

3.  You can also look at it and say, “Could we move the whole schedule up?”  Are there things done as estimates that could be done with actual numbers come October?  Are there certain things that could be started much earlier in the month?

4.  Soft numbers versus hard numbers.  Are there certain journal entries that are triggered because we’re waiting a while to get particular hard numbers?  Would we be better off working with softer numbers and having these done sooner?

Well, this gives you a number of thoughts in terms of how to look at the journal entry log and what you could do on a supplemental basis to streamline the whole process.
So, this gives you an idea on how you can use the journal entry log as a basis for rethinking how you’re processing some transactions on a monthly basis.

Jon Paul, MBA, CPA, CMC, CM&AA

President, Value Added Finance Resources
Bringing new insights on results and maximizing company value